Gift Card Marketing Guide

Gift Card Marketing GuideBest Practices

©2009 First Data Corporation. All Rights Reserved. All trademarks, service marks and trade names referenced in this material are the property of their respective owners. You may not disclose, copy or redistribute any part of these materials without the express written consent of First Data Corporation.

©2009 First Data Corporation. All rights reserved. 2Return to Table of Contents

Introduction ................................................................................................................................................................................................3

The Financial Benefits of Gift Cards ......................................................................................................................................................4

Elements of a Successful Gift Card Program .......................................................................................................................................5

Knowledge ..........................................................................................................................................................................................5

Planning and Execution ...................................................................................................................................................................5

Commitment .......................................................................................................................................................................................5

Planning Your Gift Card Program ...........................................................................................................................................................6

Marketing Plan ...................................................................................................................................................................................6

Continuous Improvement.................................................................................................................................................................6

Calendar ..............................................................................................................................................................................................7

Best Practices ............................................................................................................................................................................................ 8

Program Management .................................................................................................................................................................... 8

Card and Carrier Designs ............................................................................................................................................................... 10

Merchandising .................................................................................................................................................................................. 13

Gift Card Purchasing (Inventory Levels)..................................................................................................................................... 14

Out-of-Store Promotion ................................................................................................................................................................. 14

Employee Involvement ................................................................................................................................................................... 15

Consumer Incentives / Special Promotions ............................................................................................................................... 16

Holidays ............................................................................................................................................................................................. 17

Web Site ............................................................................................................................................................................................ 21

Business to Business ...................................................................................................................................................................... 22

Third-Party Aggregators ............................................................................................................................................................... 24

Conclusion ................................................................................................................................................................................................ 25

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Since 1995 First Data has advised its gift card clients on the most effective ways to plan, implement and grow their

gift card programs. While doing so, First Data built its knowledge of the gift card market and refined what are now

known as “gift card marketing best practices.”

The information in this guide has been gathered by groups throughout First Data including Marketing, Client Services,

Plastics, Product and others. Their varying perspectives and experiences with our clients have provided First Data

with insights from which most, if not all, of our current clients can benefit.

As you review the Gift Card Marketing Guide: Best Practices, please keep in mind that best practices are guidelines and

not rules for managing your gift card program and are in no way meant to be a guarantee of certain results. You may

need to adapt a best practice to better align with your business, and First Data recommends that you test and refine

significant changes to your program prior to rollout.

Introduction

A Gift For You!


The financial benefits that gift card programs provide

impact businesses in the short and long term. Some

First Data clients have reported that gift cards deliver

increased revenues, increased margins, interest from

unredeemed balances, increased potential for future

sales and a decrease in returned merchandise. Well-run

programs can capitalize on some or all of the financial

rewards —many of which are unique to gift cards.

A description of some of the financial benefits is as

follows:

Revenue increases. Uplift, or the amount that a J

customer spends over the amount of the gift card,

averaged $23 for each card sold in 2008. Also, gift

cards attract new customers, with 11% of recipients

indicating that they never or rarely visit the issuing

merchant’s locations1

Higher margin sales. 31% of gift card receivers say J

they are more likely to buy a full-price item rather

than an item on sale when using a gift card2

Interest from unredeemed balances. You have J

possession of the dollars on the gift card from the

time that the card is purchased. By depositing the

funds into a interest bearing account, you will be

able to earn a return on your outstanding gift card

balances

Future sales. The advertising effect of gift cards, J

whether they are in the possession of a customer

or on the shelf in a gift card mall, can help keep

your brand top of mind and can possibly lead to

additional sales

Decreases in returned merchandise. According to the J

National Retail Federation, 8.8% of holiday gifts will

be returned.3 Because gift card recipients choose

their own gifts, gift cards may reduce returned

merchandise and the high costs associated with

handling returns

The significant financial benefits motivate many of the

nation's most successful merchants to invest heavily

in their gift card programs. First Data clients should

consider all financial benefits when determining gift

card program budgets. Based on our experience, we

believe that many merchants overlook one or more of

the benefits listed above and underinvest in their gift

card programs as a result.

The Financial Benefits of Gift Cards

1 First Data. U.S. Gift Card Consumer Insights Survey. 2008. 2 First Data. U.S. Gift Card Consumer Insights Survey. 2007. 3 Source: http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=69.


Elements of a Successful Gift Card Program Essentially all successful gift card programs share a

common foundation of:

Knowledge1.

Planning and execution2.

Commitment3.

With the above, program owners can overcome

challenges and capitalize on opportunities that other

merchants overlook. They can win new customers, boost

company revenue and margins, and generally exceed

the expectations of senior management.

Knowledge

Merchants must take steps to continually build upon

their gift card knowledge. This Gift Card Marketing

Guide will provide you with some of the information

that you will need to develop and grow your gift card

program; however, the marketplace requires constant

attention. First Data recommends that you visit your

locations on a regular basis to gain a sense of store-level

execution and that you “mystery shop” other merchants

(both in-store and online) to look for ideas to improve

your gift card program.

As part of First Data’s commitment to helping our

clients grow their gift card programs, we provide

several studies aimed at increasing our clients’

knowledge of the marketplace.

Consumer Insights Survey: an annual study of gift J

card purchasers and receivers that is designed

to identify trends and provide merchants with

actionable information

Business Incentives Study: a study of gift card buyers J

that provides valuable insights into the use of gift

cards for employee incentives

Consumer Incentives Study: a study that focuses on J

using gift cards as incentives to drive purchasing

behavior

Mystery-Shopping Study: a qualitative study that J

is conducted twice annually. The results are

summaries by vertical that clients can use to better

understand their competition and the gift card

market as a whole

Planning and Execution

Success, planning and execution share a strong

relationship. This manual will provide guidance on the

planning process including scope (prioritizing initiatives,

identifying key periods for the business, etc.), schedule

(developing timelines) and resources (who should be

involved). We will also provide advice on achieving

consistent high-quality execution at the store/

restaurant level, which is a defining characteristic of

top programs.

Commitment

Stakeholder commitment will drive the success of your

gift card program. All interested parties from the CEO

down to the part-time store-level employee must

share a sense of program ownership. This guide will

provide some instruction on steps that you can take to

promote commitment from certain groups within your

organization.


Planning Your Gift Card ProgramWell-planned programs involve contributions from

stakeholders that represent various interests within

the company (e.g., marketing, operations, etc.),

identification of key periods for the business (e.g.,

Christmas, Mother’s Day, etc.) and plans that address

non-holiday periods —when the majority of gift card

sales take place. Well-planned programs include a

marketing plan that addresses merchandising, card and

carrier designs, promotion, store personnel involvement,

additional sales channels (e.g., B2B, third-party reseller,

etc.), timelines and more. Plans are completed well

in advance of implementation as lead times for many

items, especially plastics, span several months.

Marketing Plan

Gift card programs should incorporate a marketing plan.

Basic gift card marketing plans typically involve:

Marketing objective. This is often a statement of 1.

a sales goal for a period of time. It is typically

calculated as a percentage of overall sales for the

business (e.g., 3% of company revenue results from

gift card activations) or percentage increase from

the prior year.

Customer analysis. A brief discussion of which 2.

customers you are targeting and information you

have about their preferences or expectations for

gift cards.

Detailed plans of what you will do to achieve your 3.

goals. The plans should include sections for:

In-store merchandising including displays, a.

signage, etc.

Card and carrier designs including target b.

inventory levels

Out-of-store promotionc.

Employee involvement including plans for d.

communicating to location-based employees on

an ongoing basis

Special promotions that include campaigns for e.

periods of importance for the business. This

may involve special efforts for Back to School,

Mother’s Day, Father’s Day, etc.

Cross-promotions/customer incentives (e.g., buy f.

a particular item and receive a free gift card)

Holidaysg.

Your Web siteh.

Business-to-business salesi.

Third party resellers (e.g., gift card malls)j.

A budget4.

A schedule or calendar for your various 5.

gift card projects

Continuous Improvement

The highly competitive nature of the gift card business

requires gift card program owners to focus on

continuous improvement and differentiation in order

to succeed. With change, a necessary element of all

successful gift card programs, First Data recommends

developing a systematic approach to experimentation.

Furthermore, testing of new ideas should happen on a

constant basis.


Planning your Gift Card Program (cont.)

Test, Evaluate, Refine, Test Again

First Data recommends that you implement a process

of continuous improvement involving all aspects of

your gift card program including merchandising, card

designs, out-of-store promotion, employee involvement,

etc. The process should include:

Testing J new ideas on a frequent and ongoing basis

Evaluating J those ideas using well-defined metrics

and comparing their performance versus “control

groups” (e.g., similar stores that do not have the new

idea being tested)

Refining J those ideas either prior to launch or on a

regular basis while in the field

Repeating the process by identifying new ideas to J

improve gift card sales and testing again

Calendar

The calendar below identifies several occasions/holidays

that many merchants consider essential to the success of

their gift card programs. Not all merchants execute gift

card campaigns during all periods, but merchants should

consider each occasion as a potential opportunity to

generate additional gift card sales.

2009 Gift Card Planning GuideNote:

*Include your Father’s Day order with your Mother’s Day/Graduation order for best pricing.

Third-party aggregators often require planning well in advance of what is listed below. Please consult with your aggregator(s) for more information.

Occasion Holiday DateStart Card

DesignSubmit Art

ProofIn-Store

Mother’s Day 10-May 1-Jan 1-Feb 10-Apr

Graduation 15-May – 20-Jun 1-Jan 1-Feb 15-Apr

Father’s Day 21-Jun 1-Jan* 1-Feb* 21-May

Back to School 15-Aug – 20-Sep 1-Apr 1-May 15-Jul

Holiday 25-Dec 1-May 1-Jun 1-Nov


Best Practices

The following sections outline best practices for gift card

program management and execution. Although the best

practices typically apply across most business types, you

will find recommendations that do not align with your

business. Please read the following sections with your

own business in mind and with the understanding that

not all recommendations will apply to you.

Program Management

As used throughout this manual, “Program Management”

refers to the activity of comprehensively directing your

gift card program. Responsibilities include program

planning, implementation and measurement of

program performance.

Program Ownership

Merchants implement a variety of approaches when it

comes to ownership of the gift card program. Based

on our experience, we recommend that ownership of a

gift card program resides with a group that is focused

on revenue (e.g., marketing) versus other groups (e.g.,

accounting). Gift cards represent a revenue opportunity

for merchants and should be managed by groups

that have expertise in managing revenue-generating

projects. Typical issues that impact performance of

programs managed by non-revenue-focused groups are:

Improper financial incentives for program owners.1.

Gift card owners should be driven by sales goals.

Many non-revenue-focused groups receive

incentives based on managing costs, which (and

we have seen this over and over again) leads to

underinvestment in essential aspects of the gift

card program

Treatment of gift cards as “just another product”2.

in terms of inventory management and sell-through

requirements. Gift cards deliver a very high ROI,

and the cost of a lost sale is extraordinarily high.

Non-revenue-focused groups often strive for cost

savings through aggressive sell-through goals (we

have heard 90% or more), which inevitably results

in inadequate store inventory, empty gift card

displays and fewer gift card sales

Underinvestment in card and carrier designs.3.

Cost-focused groups often attempt to save money

by investing in a single design and rarely updating

it. However, consumers demand appealing and

relevant card and carrier choices. Designs are

best managed by groups that understand their

customers and who are willing to drive their

organizations to invest in birthday, holiday and

other designs that customers buy


Best Practices (cont.)

Employee Alignment and Improved Results

As mentioned previously, consistent in-store execution

is a defining characteristic of successful gift card

programs. With all locations participating in the

success of the gift card program, results are likely to be

significantly better than those where a small percentage

of locations carry the burden for the entire program.

When consistency is achieved, we often see gift card

program owners collaborating regularly with district or

even store managers, proper incentives for district and

store managers, and processes that simplify

store-level execution.

Measurement of Program Performance

In order to understand and improve program

performance, typically owners should track, at a

minimum, basic performance metrics. Several metrics

that provide insight into program performance include:

Gift card sales as a percentage of overall company 1.

revenue

Year-over-year gift card sales growth2.

Gift card sales during promotional/holiday periods3.

Gift card sales trends for card designs 4.

(slowing sales may indicate that it is time for

a design refresh)

B2B gift card sales5.

Average dollar amounts loaded onto cards6.

Online gift card sales (if relevant)7.

Third-party aggregator gift card sales (if relevant)8.

May include:

9. Percentage of cards that are reloaded

10. Total reload as a percentage of gift card sales

The majority of businesses with established and well-

run gift card programs typically generate anywhere

from 1% to 5% (depending upon a number of factors

including vertical) of overall revenue from gift card

sales. New gift card programs will likely find that they

will need anywhere from 1 to 3 years to reach the range

identified above.

Program owners will want to consider documenting the

performance of prior programs (e.g., gift certificates)

prior to or while launching their gift card program.

Demonstrated performance increases resulting from

gift card programs often provide leverage with senior

management when requesting additional program

funding or resources.



5 First Data. U.S. Gift Card Consumer Insights Survey. 2008. 6 Ibid

Card and Carrier Designs

The best gift card and carrier designs tend to be:

Attractive1.

Consistent with the merchant brand2.

In alignment with a merchant’s 3.

customer demographics

Representative of the occasion for 4.

which they are given

Unique in some way(s)5.

The quality and appropriateness of gift card and carrier

designs can impact gift card sales. While the value of

adding or changing a particular card or carrier design

can be difficult to determine, consider the following:

12% of consumers indicated that a card that is 1.

visually appealing is the most important feature in

selecting the card5

A number of merchants have commented that 2.

multiple card designs increase gift card sales

The strongest gift card programs offer attractive 3.

and occasion-specific card and carrier designs

Significant competition exists in the gift card space 4.

for consumer dollars

Occasion-based giving is extremely high. The table 5.

to the right, which was taken from First Data’s

2008 Consumer Insights Survey, suggests that

occasion-based cards such as those for Christmas

and birthdays align with the purchasing patterns

of consumers

Gift Card Giving Occasions6

(Percentage of gift card purchasers who gave at least

one gift card for the corresponding occasion)

Occasion % GivingChristmas 50%

Birthday 48%

Thank You Gift 18%No Special Occasion 12%

Mother’s Day 8%Father’s Day 5%

Anniversary 4%Congratulations 4%



7 First Data. U.S. Gift Card Consumer Insights Survey. 2008. 8 Ibid.

For most businesses, multiple card and carrier designs

are needed to maximize the gift card program’s value to

a merchant. From one business to the next, the optimal

number of designs could vary widely. The number and

variety of card and carrier designs that a merchant should

carry depend upon several factors including:

Budget1.

Size of the gift card business in sales and reloads2.

The sales potential for the gift card business3.

Holidays and special promotions that are 4.

significant to the business throughout the year

(e.g., Christmas, Mother’s Day, Father’s Day, Back

to School, etc.)

Uses of the gift card (e.g., gift card, spending card, 5.

merchandise return cards, etc.)

Number of sales channels used (e.g., in-store, 6.

online, third-party aggregators, business-to-

business sales, etc.)

Customer demographics7.

Gift card programs of direct competitors8.

The cost of a lost gift card sale (average load plus

average spent over that amount equal an average of

nearly $70 per card sale)6 are quite high versus the

relatively low cost of a gift card and carrier (typically

anywhere from $.15 to $1). When deciding whether

to add a new card or carrier design, First Data

recommends that you consider:

Gross margins from the average card sale1.

Gross margins from the average card uplift 2.

(uplift equals roughly half the original card value)8

Cost of card and carrier3.

Your gift card program’s contribution to the company’s

bottom line can increase significantly with well-chosen

additions to your card and carrier offerings.

Technology Trends

As with all products, gift cards benefit from

differentiation. Gift card technology, which we define as

any card technology other than plain white plastic with

four-color process printing, often serves to increase the

appeal of gift cards. First Data encourages its clients to

test one or more card technologies and measure their

impact to sales. Merchants in search of a competitive

edge may find it in a well-displayed or well-promoted

clear, lenticular, die cut, foil, scratch ’n’ sniff, recycled

plastic, corn plastic or other type of card. For ideas

about available card technologies, speak with your

Account Manager.

A Gift For You!



Cobranding Trends

Cobranded cards continue to gain in popularity. A few

examples of the types of cobranding that we see in

today’s marketplace include:

Merchant brand + product brand that the merchant 1.

does not own. Merchants partner with suppliers

of branded products to offer cards that feature a

particular product brand

Merchant brand + product brand that the merchant 2.

owns. Merchants place their own product brands

on gift cards to increase awareness of brands, help

launch new products, etc.

Merchant brand + music download merchant 3.

brand. The merchants partner to offset card costs,

appeal to mutual customers and promote their

brands

Multiple merchant brands.4. Merchants with more

than one branded concept (such as a restaurant

operator with a Mexican restaurant and a Chinese

restaurant) offering cards with both brands that

work at both locations

Merchant brand + brand of charitable organization.5.

Merchants who support charities may desire to

have their names associated with the charitable

organizations

Cobranded cards should be considered in any of the

following scenarios:

Your business has a card budget that is insufficient 1.

to fund the selection of cards that you would like

to offer

You work closely with a supplier of branded 2.

products who may see a benefit to having their

products included on a gift card

Your business has product brands that it owns and 3.

would like to promote

Your business owns more than one store or 4.

restaurant brand and you have the appropriate

technology enabled to allow the gift cards to work

across the locations.

Carrier Trends

Historically, gift card carriers were limited to the paper-

stock hangers to which the cards were affixed. In recent

years, new trends have emerged, which include carriers

that better align with the merchant brand and different

occasions. A few examples:

Small, attractive boxes for brands that emphasize 1.

design or prestige

Small gift bags2.

Creative use of fabric bags3.

Envelopes4.

Decorative tins that consumers must purchase5.



When deciding upon which carriers to offer, consider

that the carrier reflects your brand and that your

customers consider it an important part of the gifting

package. First Data recommends that:

Available carriers are displayed along 1.

with gift cards

Carriers that are consistent with your 2.

brand are offered

Birthday-themed carriers are offered3.

Frequency of Design Refresh

Consumers desire attractive, occasion appropriate and

new card and carrier designs. In order to keep your gift

card program interesting (and even relevant), First Data

recommends that companies track card performance on

a monthly or quarterly basis. New card designs should

be added every 12 months or sooner and card designs

should be replaced every 18 months or sooner.

Merchandising

Effective gift card merchandising accomplishes a

number of tasks including:

Communicating to all customers that gift cards are 1.

sold at that location and that those gift cards are a

desirable and popular gift

Communicating to all customers the variety, 2.

relevance and quality of gift card and

carrier designs

Reinforcing the “convenience” benefit of 3.

purchasing gift cards. One way to promote

convenience is to place all gift card and carrier

designs on one centrally located, highly visible,

easily accessible, well-organized display

Appealing to “impulse” card purchasers. Displaying 4.

an assortment of gift cards near each cash register

will better enable shoppers to buy on a whim

Best practices for merchandising for most

locations includes:

Neat, organized, well-stocked gift card displays1.

Gift cards should be within reach of customers a.

so that they can pick up the cards without

assistance from store workers

Gift card facings of the same design are placed b.

together on each display so that customers can

easily identify unique card designs

Displays are carefully chosen so that pegs or c.

pockets appear full when stocked with the

number of cards or carriers that the merchant

wants to display

Gift card signage on all displays2.

At least one gift card display that holds all card and 3.

carrier designs

A gift card display at each cash register4.

Gift card displays placed in sections where 5.

customers might be looking for them (e.g., baby

clothes, toys, general “gift” sections, greeting

cards, etc.)

Planograms for gift card displays, managed by gift 6.

card program owners, that instruct store workers

to place the cards and carriers that are most likely

to sell on a particular display in the most desirable

positions on that display



9 First Data. U.S. Gift Card Consumer Insights Survey. 2008.

Gift Card Purchasing (Inventory Levels)

Gift card displays that are full and neat tend to catch

your customers’ eyes, send the message that gift cards

from your store are a desirable item and result in addi-

tional sales. Displays that are sparsely stocked are often

overlooked by customers and generally result in fewer

gift card sales.

Some merchants make the mistake of not replenishing

popular card designs because they are trying to sell

through inventories of less popular card designs. In

order to maximize sales, gift card designs that are on

display should be current and relevant.

Best practices for gift card purchasing and inventory

management are:

1. Maintaining adequate card inventories at each

location to fully stock all displays and carry a

reasonable backstock

2. Replenishing best-selling card designs. Card

designs impact sales—maintaining inventories of

best-selling card designs can lead to additional

sales

3. Factoring in appropriate lead times to gift card

ordering and distribution. Forecast gift card sales

to avoid low and out-of-stock situations

Out-of-Store Promotion

Possibly the most often overlooked part of a gift card

program is out-of-store promotion. Interestingly, 86%

of consumers said that they planned their gift card

purchase.9 Because most gift card purchases are

planned rather than impulse buys, merchants need

to take steps to build awareness of their gift card

programs. While we understand that not all of the

following will apply to all merchants, best practices

for out-of-store promotion include:

Incorporating or featuring gift cards in existing 1.

mass media advertising campaigns including those

through TV, Internet, radio, newspaper, magazines,

inserts, etc.

Utilizing customer mailing or e-mailing lists for 2.

direct mail efforts aimed at driving sales of gift

cards to existing customers

Establishing campaigns to promote gift cards 3.

during the holidays or other key periods of the year

for the business

Incorporating gift cards on a merchant’s Web site, 4.

including placing a card image on the home page,

using a persistent link in the header and footer, and

featuring special promotions on the home page

(e.g., buy $50 in merchandise and receive a free

$10 gift card)

Advertising gift cards year round because gift card 5.

purchases happen every day of the year



If the medium allows, include an image of a gift card

design and a statement about gift cards in a highly

visible location on the ad. Incorporating a consumer

incentive (e.g., buy a certain item and receive a $25 gift

card) provides a number of benefits that are discussed

in the Consumer Incentives/Special Promotions section

of this guide.

Also consider capturing the e-mail or mailing addresses

of your gift card customers. Interestingly, approximately

20% of adults spend roughly 80% of all dollars spent on

gift cards. Persons who are buying your gift cards likely

will buy a number of gift cards throughout the year.

By targeting your gift card buyers with advertising, you

may increase your chances of repeat gift card purchases.

Employee Involvement

Store-level employees can impact gift card sales

significantly if they are trained, interested in selling

gift cards and feel a sense of ownership over the gift

card program. Merchants that successfully engage

employees do so using a number of separate methods:

Creating a “Gift Card Champion” at each store or 1.

restaurant. This person is responsible for ensuring

that gift card signage is posted, displays are neat

and full, and employees are trained in selling gift

cards. The “Champion” does not need to be the

store manager

Insert gift card sales as a metric for store manager 2.

performance evaluations

Include gift cards in employee training materials. 3.

Employees should:

Understand the benefits of gift cards for a.

customers (e.g., they are convenient for the

buyer and receiver, they allow recipients to

choose what they want, and people like to

receive gift cards)

Understand your gift card offerings (e.g., b.

whether or not the cards are rechargeable,

which other stores locally accept the cards,

min/max load values, available card denomin-

ations, where the cards are displayed in the

store, the fact that the cards carry no stored

value until activated, etc.)

Have a few gift card sales tactics handy (e.g., c.

asking customers whether they would like to buy

a gift card after a customer asks about gift cards)

Store-level sales contests where employees and 4.

stores are rewarded for their sales relative to other

stores or versus their own historical performance

Sales Contests

Sales contests generate excitement and awareness of

the gift card program among employees. Contests also

motivate stores to take steps to sell more gift cards.

Successful contests involve at least three elements:

Incentives or prizes for winning stores and 1.

store managers

Winning stores should be determined by a.

region/area so that the frequency of winning

stores is relatively high (one in five through 10)



Store managers should receive cash, a gift card b.

or another desirable incentive that is beyond

what store-level employees receive

Regular employees could receive a gift card, c.

small cash prize, a party of some sort or other

prize of modest value

Kits of relevant materials sent to locations that 2.

may include:

Information that explains the contest to a.

employees (e.g., posters or letters)

Gift cards, signage, displays, employee b.

buttons/name tags, bag stuffers or other items

that stores may need to successfully sell cards

Frequent communication between the corporate 3.

office and stores. Store-level employees need

to have regular updates of how they have been

performing

Holiday sales contests are the most common. Many run

from Black Friday (the day after Thanksgiving) through

the end of December.

Consumer Incentives / Special Promotions

Gift cards can be used as a tool to encourage customers to:

Visit your stores1.

Try new products2.

Try more expensive or higher margin items3.

Choose a particular brand4.

Consumer incentives cards are gift cards given to

consumers who perform certain desirable actions —such

as purchasing a product. You may be familiar with gift

cards as incentives—they are often used by certain

restaurants, electronics retailers, home appliance stores

and cellular service providers. First Data has studied

the effectiveness of gift card incentives offerings.

Consider the following facts taken from First Data’s 2007

Consumer Incentives Study:

Three out of four consumers interviewed showed 1.

interest in purchasing or testing a product if there

was a gift card given in return

Nearly nine out of 10 consumers who have received 2.

an incentive gift card are interested in continuing

to receive gift cards as an incentive

Three out of four consumers report an incentive 3.

gift card would make them more likely to make that

purchase at the store offering the card

First Data encourages its clients to test gift card

incentives, possibly in place of cash discounts. Gift cards

given as incentives encourage repeat store visits, can

be less costly to offer than cash discounts and increase

awareness of your gift card program.



10 http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=604. 11 First Data. U.S. Gift Card Consumer Insights Survey. 2008. 12 Ibid.

First Data recommends the following:

Consumers expect to have to make a purchase to 1.

receive an incentive gift card, so tie your cards to

the purchase of a new item or a higher priced or

higher margin item that you want them to buy

Consider partnering with non-competing or 2.

complementary brands to offer your gift cards

as a consumer incentive from their locations. For

example, a bank could offer gift cards for a local

restaurant to customers who open a new account

Develop gift card incentives offerings that target 3.

specific customer demographics. For example, a

clothing retailer could offer a $10 gift card with

the purchase of a $50 handbag. The same retailer

could offer a $15 gift card with the purchase of a

$100 men’s jacket

When measuring the effectiveness of your offering, 4.

remember that the customers who receive your gift

cards have a reason to return to your store. Also,

when gift cards are redeemed, consumers are more

likely to buy non-sale items with their cards and

spend more than the value of the cards

Holidays

Holidays account for a large percentage of all gift

card sales. Most merchants generate anywhere from

25% to 50% of their gift card sales during the Christmas

season. According to the National Retail Federation,

the average gift card purchaser was planning to spend

$147.33 on gift cards in holiday 2008.10 Other holidays

hold significance as well with many gift card programs

experiencing sales increases at Mother’s Day, Father’s

Day and graduation.

During Christmas and other important holidays for

your business, First Data recommends that merchants

take additional steps to capitalize on the opportunities

that holidays provide. Consider the following during

holiday seasons:

Build awareness of your gift card program through 1.

inclusion of cards in print, radio, TV, direct mail,

e-mail, online and other advertising opportunities.

Because the vast majority of gift card purchases

are planned (86%)11, holiday advertising can be

started as early as October

Develop one or more seasonal carriers and/or card 2.

designs

Provide specific instructions to stores about how a.

to merchandise the seasonal cards and carriers

to maximize their exposure

Increase the number of gift card displays in 3.

your stores

Place a gift card display at or near each registera.

Increase the number of adjacencies, or gift b.

card placements, in your locations, especially in

areas close to items often given as gifts. (46% of

consumers said that they were “likely” or “highly

likely” to purchase a gift card if an item they

wanted was out of stock.)12

Run holiday promotions that include gift cards as 4.

consumer incentives (e.g., buy a $25 gift card and

receive a $5 gift card free, spend $200 and receive

a $20 gift card, etc.)



Offer premium carriers that customers must pay for 5.

such as metal tins, boxes, die-cut envelopes, etc.

Provide merchandising kits to locations that include 6.

items such as gift cards, displays, signage and

recommendations of where and how to place each.

Involve store-level personnel. The goal of the 7.

following suggestions is to create excitement among

store-level workers, educate them about selling gift

cards, and have them proactively sell gift cards.

Have them wear name badges, hats, shirts, etc., a.

that promote gift cards.

Provide at least some gift card sales training b.

(see the Employee Involvement section)

Have a store-level sales contest (see the Sales c.

Contests section)

A Gift For You!



Holiday Planning

Card planning for the holidays should begin about eight months in advance. The advice may seem overly cautious,

but let’s look at our recommended timeline and the explanation for it.

As a best practice, your goal will be to have cards in stores at the beginning of November (to allow consumers the

opportunity to see your offerings and plan their purchase of them). To maximize your likelihood of reaching your goal,

start designing your cards May 1. Plan to submit your art proof on June 1 to allow you and First Data time to manage

through the proof approval process and the extended lead times common to the peak months leading up to the

holiday. You would receive your cards around the end of September, which gives you a month to distribute cards

to your stores. With the cards in stores by the beginning of November and on display soon thereafter, you will have

completed a key step in maximizing the performance of your holiday gift card program.

Cards Sold in Stores Jan Feb Mar Apr May June July Aug Sep Oct Nov DecDevelop, finalize and submit card designs

Card proofing, production and affixing cards to carriers

Card distribution to stores

Cards in stores


When working with a gift card reseller (e.g., Walgreens, Blackhawk, InComm, Coinstar, etc.), additional lead time is

required. Because third-party resellers may require merchants to deliver holiday card inventories to their warehouses

as early as September, merchants need to begin the process of holiday planning in the January-February time frame.

Ask your resellers when they require holiday cards and carriers delivered to them.


Cards Sold Through Third-Party Reseller Jan Feb Mar Apr May June July Aug Sep Oct Nov DecDevelop card designs

Aggregator review and sign-off

Card proofing, production and affixing cards to carriers

Cards sent to reseller warehouse

Cards delivered to stores by reseller

Cards in stores


Web Site

A best practice, regardless of whether gift cards are

sold on a merchant’s Web site, is to use your Web site to

increase awareness of your gift card program. Of course,

if you sell your gift cards using your Web site, then

certain steps should be taken to promote your offerings.

Web site best practices for merchants who do not sell

gift cards on their Web sites:

Provide a persistent header, footer or navigation 1.

bar link to the page that you use to describe your

gift card offerings. Consider using an image of one

or more of your gift card designs as the link

Have a page that includes images of your gift card 2.

offerings along with a brief description of the gift

card benefits

Web site best practices for merchants who sell gift

cards on their Web sites:

Provide a persistent header, footer or navigation 1.

bar link to the main page that you use to sell gift

cards. Consider using an image of one or more of

your gift card designs as the link

Display and offer multiple card designs that 2.

customers can buy through your Web site

Allow customers to choose the gift card value 3.

either by allowing customers to enter any value

for their gift card within a specified dollar range

(e.g., $5 to $500), or by offering numerous value

increments within a specified dollar range (e.g., all

$5 increments between $5 and $500)

Allow customers to send brief, personalized 4.

messages along with the cards

Ask customers for sender and receiver information 5.

so that messaging that accompanies cards includes

“To”/“From” lines

Include a free carrier along with each gift card 6.

order that reflects your brand. The carriers can be

very inexpensive (e.g., a paper sleeve) or higher

cost and elegant (e.g., attractive box) to reflect a

premium brand

Enable bulk purchasing of gift cards along with 7.

discounts for business customers (see the Business

to Business section for more information). You will

likely need to have separate Web site pages to

explain your business-to-business program

Incorporate gift cards into online 8.

promotions/consumer incentives (e.g., spend $100

and receive a $10 gift card, buy an item for $200

and receive a $25 gift card)

Advertise online promotions/consumer incentives 9.

on the home page



Business to Business

According to Mercator Advisory Group, a reputable

gift card research firm, sales of gift cards to businesses

will represent over 10% of all gift card sales in 2009.13

Considering that not all merchants actively pursue bulk

sales opportunities, those that do can significantly

boost their overall gift card sales.

Nearly 80% of all gift card purchases made by

businesses are done through the merchant’s main office

or at the merchant’s store.14 The remainder, for closed

loop gift cards, involve brokers (such as Blackhawk or

InComm) or full-service incentive providers such as

Maritz or Carlson.15

Consider a few other interesting facts:

Over 90% of gift card incentives users ordered gift 1.

cards more than once in 2006 and 39% ordered

gift cards five or more times16

The majority of gift cards given by employers 2.

to their employees are given as performance

recognition, sales incentives and length-of-

service rewards17

71% of current business incentives card buyers and 3.

64% of those who intend to buy cite “ability to

select the card denomination” as having a strong

influence on card selection18

Of total dollars set aside for incentives by 4.

businesses that currently give gift cards to

their employees, 30% is allocated to closed

loop gift cards19


13 Mercator Advisory Group. Prepaid Market Forecasts 2007-2011. November 2008. 14 First Data. Business Incentives Study. August 2007. 15 Ibid. 16 Ibid. 17 Ibid. 18 Ibid. 19 Ibid.


First Data considers the following best practices

for establishing and growing a successful B2B gift

card program:

Target businesses with solutions and messaging 1.

that is tailored to business customers

Offer carriers and/or cards with messaging such a.

as “Congratulations!”, “Thank You” or “Great

Job!”

Discount cards for bulk purchases. Typically, this 2.

is done based on total dollars sold (e.g., buy

$1,000-$2,500 worth of cards and receive a 3%

discount, $2,500-$5,000 and receive a 4% discount,

$5,000-$10,000 and receive a 5% discount,

$10,000-$20,000 and receive a 7% discount,

$20,000+ receive a 10% discount). Actual discounts

may vary significantly by vertical

List a phone number on your Web site for business 3.

customers to call to place orders

Employ one or more designated salespersons to 4.

sell gift cards to businesses

Because businesses, on average, place multiple 5.

orders for gift cards, establish relationships with

your business customers. Salespersons combined

with automated e-mail reordering reminders or

other processes may help merchants capture

additional reorders

Offer non-denominated cards because buyers 6.

like to select the amounts that they will load

onto the cards

Emphasize B2B gift card sales year round 7.

as businesses give out gift cards for

non-calendar events

Plan to work with businesses of all sizes as budgets 8.

for incentives range from under $5,000 to millions

of dollars

Develop marketing campaigns that incorporate 9.

direct mail, and magazine and trade publication

ads to build awareness of your gift card business-

to-business program

10. Implement processes in your stores so that bulk

purchases can be completed quickly and customer

contact information is collected

11. Consider working with a third-party reseller such

as Walgreens, InComm, Blackhawk, Coinstar, etc.,

and a full-service incentive provider such as Maritz

or Carlson to develop your B2B sales program



Third-Party Aggregators

Third-party aggregators are businesses that manage

gift card malls in retail locations. They represent the

fastest growing segment of closed loop gift card

sales. With sales of gift cards through gift card malls

forecasted to grow by over a third in 2009 and 2010,

gift card malls are rapidly becoming a very desirable

gift card distribution channel.21 According to First

Data’s 2008 Consumer Insights Survey, 38% of gift card

purchasers bought a closed loop gift card at a gift card

mall during 2008.

Aggregators sell gift cards in over 200,000 locations

in the United States. Working with an aggregator

may allow you to dramatically increase the number of

locations that sell your gift cards. Also, aggregators may

position your product to be bought by “heavy users”

or those persons who spend over $200 a year on gift

cards and account for 77% of all gift card sales. “Heavy

users,” tend to be those with a higher income, so brands

that mainly serve lower income customers may not

have access to as many “heavy users” and may benefit

exceptionally from selling through an aggregator. For

example, some heavy users may rarely enter a fast-food

restaurant but might enthusiastically buy gift cards for

fast-food restaurants as gifts if the cards were more

accessible.

First Data considers the following best practices when

working with a third-party aggregator:

If all your locations are owned and operated by 1.

the corporation, then you can consider using an

existing card design to sell through the aggregator

If you have franchisees or licensees, create a 2.

unique card design for your third-party aggregator.

The design will allow your franchisees to see the

investment that the corporation is making to

increase sales at their locations

Sell at least two card denominations at every 3.

location. Third-party aggregators usually require

cards to be denominated. Typical card values

depend upon your business. For example,

optimal values for coffee shops may be $20 and

$35, while some specialty retailers may find that

$50 and $100 cards best reflect their brands

and customers. Base your selection on your

average sale and brand positioning

Be prepared to discount your cards when working 4.

through aggregators

Third-party aggregators to contact include:

1. Walgreens

2. InComm

3. Blackhawk Network

4. Coinstar


21 Mercator Advisory Group. Prepaid Market Forecasts 2007-2011. November 2008.


Conclusion

The best practices found in this guide are based

on countless observations of success and failure.

Although we cannot guarantee that by following our

recommendations your program will reach the pinnacle

of gift card success, we can say that industry-leading

merchants typically incorporate best practices into all

aspects of their gift card programs. Also, we strongly

believe that by following best practices, merchants will

increase the effectiveness of their investments and will

see improved top- and bottom-line performance of

their gift card programs.

As you move forward, keep in mind that success involves

consistent, high-quality planning and execution across

all aspects of your gift card program. For example,

in-store merchandising excellence alone will not

provide a tremendous boost to your program unless

it is accompanied with solid out-of-store promotion,

active employee involvement and appealing card

and carrier designs that your customers want to buy.

Furthermore, excellence will stem from the effectiveness

of your planning and the strength of team members’

commitments. Focus adequate resources in ensuring

that your team includes the right people, develops

an effective plan and involves the employees who are

closest to your customers.

In addition to a Gift Card Marketing Guide: Best

Practices, First Data provides a number of resources to

supplement your knowledge of the marketplace. If you

have not received information recently from First Data,

please ask us for the latest research, presentations and

webinars that may provide you with insights that can

help you grow your program.


A Global Leader in Electronic Commerce

First Data powers the global economy by making it easy,

fast and secure for people and businesses around the

world to buy goods and services using virtually any form

of payment. Serving millions of merchant locations and

thousands of card issuers, we have the expertise and

insight to help you accelerate your business. Put our

intelligence to work for you.

For more information, contact your First Data Sales Representative or visit firstdata.com.

© 2009 First Data Corporation. All rights reserved. All trademarks, service marks, and trade names referenced in this material are the property of their respective owners.

A Gift For You!

Gift Card Marketing Guide

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